Big Tech’s AI spending spree is one Halloween surprise that’s jump-scaring investors today.

Microsoft and Meta Platforms both reported earnings Wednesday afternoon, and despite the fact that both beat on top and bottom line expectations, shares of the two Magnificent 7 stocks were in the red today.

Why? Sure, the tech behemoths reported disappointing forward-looking guidance—but more importantly, both highlighted huge capital spending plans that struck investors with more fear than realizing a toddler in their vicinity just ate an entire bag of candy corn.

​​Microsoft's CapEx hit $20 billion last quarter, of which $14.9 billion was paid out in cash—up 50% from the same quarter last year, and more than the company spent in a full year prior to 2020.

Meanwhile, Meta lifted its full-year capital expenditure forecast to between $38 billion and $40 billion, compared to the previous range of $37 billion and $40 billion.

“We continue to expect significant capital expenditure growth in 2025,” said Meta Platforms CFO Susan Li on the earnings call. “Given this, along with the back-end-weighted nature of our 2024 capex, we expect a significant acceleration in infrastructure expense growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet.”

AI ain’t cheap

Competing in the AI race is a costly endeavor. Not only does creating large language models take a huge amount of resources and power, but building the physical data centers that run these programs brings up a whole other set of money-draining demands.

Meta and Microsoft aren’t the only big tech kahunas splashing out on machine learning. Alphabet and Amazon have both allocated huge percentages of their annual revenue to capital spending, but not quite as much as Microsoft and Meta (at least this year).

And the fear is that, despite the huge hype for all things AI, these companies aren’t seeing any bang for their big bucks (yet). But according to executives, you gotta spend money to make money.

“You have to build to meet demand,” argued Microsoft CFO Amy Hood on the firm’s earnings call.

Should you keep the faith? Investors, at least for now, aren’t punishing these companies too much.

“We don’t love all this needless spending but it’s a high-class problem to have – being able to spend on innovation initiatives while the core business grows and end-market opportunities expand,” explained Eric Clark, PM of the Rational Dynamic Brands Fund in a note.

Morningstar’s equity team concurred: “While Meta's investments in GenAI have raised eyebrows, we reiterate our belief that their true value will manifest itself in Meta's core advertising product.”

Overall, analysts are still bullish on big tech, despite some dissenters worrying that they’ve flown too close to the sun.

Look at former AI darling Super Micro Computer, for example. But that’s a horror movie for another Halloween.—LB

🟢 What’s up

• Comcast popped 3.39% on the news that it is exploring a separation of its cable business. The network operator got a boost this quarter from the Olympics, but still lost 365,000 cable TV customers.
• Peloton Interactive pedaled 27.82% higher after the bike maker beat earnings expectations and introduced a new CEO.
• Carvana accelerated 19.23% on an impressive beat-and-raise earnings report that caps off the car seller’s incredible comeback.
• Booking Holdings, owner of Kayak and Priceline, hit a record high after the travel company reported shockingly strong earnings. Shares rose 4.76%

What’s down

• Trading in shares of Trump Media & Technology Group was halted yet again today after the meme stock sank dramatically to start the day. Shares ended the trading session down 11.72%.
• Estee Lauder plummeted 20.84% on a triple whammy of bad news: The cosmetics retailer missed earnings estimates, pulled its forecast, AND cut its dividend. Ouch.
• Nikola dropped 7.09% after the EV startup announced a larger-than-expected loss last quarter.
• Super Micro Computer continued to tumble today, declining another 11.97% as the fallout from the resignation of its financial auditor raises the threat of the semiconductor stock getting delisted from the Nasdaq.
• eBay sank 8.18% after beating earnings expectations but issuing disappointing earnings guidance heading into the holiday season.

There’s mistakes, and then there’s preventing an entire multibillion-dollar industry from doing business in your state.

After a bunch of big Wall Street types moved to Miami over the last few years and made it the center of the crypto ecosystem, the state wanted to entice more financial firms to do business there. That’s why, back on October 1, it passed a law making it easier for Florida-based startups to raise funds, without jumping through a lot of disclosure and securities regulation hoops.

To prevent scams, however, the state made sure to note that anyone who’s gotten in trouble with the SEC for securities fraud wasn’t allowed to have any dealings with Florida firms.

The problem is that includes just about every single bank in America.

Which is why companies like Bank of America and JPMorgan stopped doing business with Florida-based hedge funds like Citadel Securities and Elliott Investment Management for the entire month of October.

The Florida legislature scrambled to amend the law, invoking emergency powers designed to aid in hurricane relief to do so. But the damage has already been done, and any company that was thinking about moving to Florida has to be having second thoughts, no matter how good the Miami nightlife is.

Our global tour de earnings sensation is back with another roundup of must-know corporate results.

💲Robinhood may be the chosen platform for Gen Z traders, but that wasn’t enough to save it from falling 16.73% after it missed both earnings and revenue expectations. Despite the fact that sales increased 36% from the year prior, the $637 million in revenue still came below the $658.2 million expected. CFO Jason Warnick said on the firm’s earnings call that the disappointing results were caused by analysts missing an accounting quirk and overestimating forecasts. That’s what we’re going to tell ourselves next time we miss our own budgeting goals.

Uber drove downhill 9.33% after the carmaker reported that its gross bookings (a metric that shows revenue before other costs, such as driver pay) came in under analyst expectations. Yet the news wasn’t all bad: The company reported its revenue jumped 20% year over year to $11.19 billion. Uber also reported EPS of $1.20, well above the $0.41 projected by analysts. “We are in the fortunate position of having strong performance in our core business,” Uber CEO Dara Khosrowshahi said.

Roblox announced results that were so great they made investors quickly forget that a famed short seller dubbed the company a “pedophile hellscape” just a few weeks ago. Shares jumped 19.89% after the gaming company beat top and bottom line analysts expectations for last quarter. And Roblox raised its guidance for full-year bookings (which represents the sale of its virtual currency) up to between $4.34 billion and $4.37 billion, above the previous forecast of $4.18 billion and $4.23 billion.

Your moment has arrived, investors: Break out your SPY ETF costume, and get ready to lecture trick-or-treating children about opening a Roth IRA as soon as they get their first job, because it's the spookiest day of the year.—LB

• Inflation is getting oh-so-close to the Fed’s target rate. The latest PCE report revealed that inflation hit 2.1% last month, though Core PCE hit 2.7%.
• The Treasury Department announced that the latest series of I bonds will pay 3.11% annual interest through next April—a dramatic drop from the previous yield of 4.28%.
• More good news for the labor market: Jobless claim applications fell by 12,000 to 216,000 last week, below the 227,000 economists forecast.
• A lot is riding on the presidential election next week, including the future of the US auto market.
• Since the pandemic, commercial real estate has been under the microscope. But the stars are aligning for office buildings to have a much better 2025.
• Here are the 15 worst stocks of October—hopefully none of your investments are on this list.

US Jobs Report: This is the big one, the one that tanked the market back in August, and the one that could do it again if the numbers come in lower than anticipated. The problem is that no one really knows what to expect with hurricanes and strikes muddying the waters. Economists think just 120,000 jobs were added in October—less than half of September’s shockingly strong 254,000 increase—and the unemployment rate is forecast to remain at a low 4.1%.

Thankfully, the earnings tsunami has abated a bit and Friday’s pretty quiet overall.

Before the open

• Dominion Energy (D) has fully recovered from its terrible 2023 thanks in no small part to the advent of AI and all of its excessive energy needs. Dominion, which primarily serves Virginia and North Carolina, is at the epicenter of the data center storm, and its new nuclear deal with Amazon will give this utility provider plenty of juice in the years ahead. Consensus: $0.92 EPS, $4.18 billion in revenue.
• Wayfair (W) has had a downright terrible 2024. The online home goods retailer is caught in the crosshairs of lower consumer spending, and has been forced to cut costs left and right in order to boost the bottom line. Revenues are flat, debt is mounting, and shareholders are wondering when the pain will end. Management better have some answers for them. Consensus: $0.14 EPS, $2.89 billion in revenue.